Benchmarks

Know how you stack up against the rest of the industry.

Written by Erin Carey Updated over a week ago

Baremetrics is used by hundreds of companies to monitor the health of their business and improve key metrics. Benchmarks works by using this completely anonymized dataset to see how your company stacks up against other similar subscription companies.

How am I grouped with other startups?

At the top right of Benchmarks you will see which cohort you are in. We've grouped you with other companies who charge a similar amount per customer to make benchmarks even more applicable.

How can I improve my metrics?

Monthly Recurring Revenue

Monthly Recurring Revenue (also known as MRR) is the holy grail of SaaS metrics. If Up and to the right is the goal of any growing business, then MRR is the measuring stick.

Improving your MRR can be done in two ways: Increase revenue or decrease revenue lost to churn. Easy as that, right? 😂

Lifetime Value

LTV is the best metric to answer the question: How much can I spend to acquire a customer? Naturally that's quite an important consideration!

ARPU and User Churn are the two drivers of this metric. You can increase your LTV by either charging more or reducing user churn. Simply put, the longer folks stick around and the more you pay, the better off your business.

Churn

Churn is perhaps the most difficult metric to improve. The reasons for folks leaving are wide, and by the time someone cancels, it's often too late to get feedback on what you could have done better or differently.

Some churn can be avoided quite easily. Failed Charges often make up a huge percentage of your churn, so tackle that first!

NPS surveys are a great way to get valuable feedback from your customers before they churn. It is one of the single best predictors of churn.

Active Customers

A general rule of thumb is that the more customers the better; however, that doesn't always hold true.

If you're not charging a whole lot of money each month, it can be really hard to move the needle on a metric like LTV. Acquiring customers is challenging, and not all that rewarding if you don't make much from them over their lifetime.

You should also take the market size into the equation. If your product is very niche, and you only charge $10 a month, your total earnings will peak very early. Low price, high volume pricing can only work in a handful of industries.

Quick Ratio

This metric is the best way to see the relationship between new customer acquisition and churn. Any number below 1.0 is bad, as you are churning more revenue than you're adding. The higher above 1.0, the better, though it's common for young companies to have a much larger quick ratio than established ones.

How you improve your quick ratio depends first on identifiying whether your biggest issue is churn or adding new customers. Then, work to address either of those things and you should soon begin to see the hard work pay off in an improved quick ratio.